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June 7, 2005

Nasdaq and Reuters Launch New Research Service

The Independent Research Network will make available independent research on small public companies

The Nasdaq Stock Market, Inc. and Reuters have formed a new company--The Independent Research Network (IRN)--that the parent companies pledged would provide aggregated, quality equity research from multiple, independent research providers on under-researched public companies. Bob Greifeld, president of Nasdaq, said the company "will help solve the problem" of a lack of research on public companies listed in the U.S., especially smaller-cap companies, and not just companies listed on Nasdaq. Devin Wenig, president of Reuters' Business Divisions, said the cutback in Wall Street's research budgets has left many such companies uncovered over the past few years; he suggested in a conference call June 7 that some private companies may be interested in paying for that research as well to broaden their appeal to investors. The companies cited data showing that about 50% of all publicly held companies have two or fewer analysts and 35% of all public companies have no coverage.

Companies that want to sign on must commit to the research service for three years, said Greifeld, and in exchange will get coverage from three independent analysts for that time period. Greifeld said the "working number" for the cost to the company will be $100,000/year. The companies declined to name specific analysts that will provide the research, but said they are actively evaluating potential providers; the company is expected to start providing the research within three months. Regarding access to the research, Greifeld said IRN "will be seeking the broadest distribution possible," mentioning Reuters' screens and other channels, including public ones. Nasdaq has a majority of the membership interests in the new venture; Reuters is a minority owner.